January 2021

• Global markets began 2021 positively as vaccine rollouts, additional fiscal stimulus expectations and accommodative central bank policies supported investor confidence.
• Equity markets globally reached new highs despite ongoing coronavirus restrictions and uneven vaccine distribution progress.
• Technology and growth sectors remained strong, though cyclical and value sectors also benefited from reopening optimism.
• Bond yields began rising modestly as investors anticipated stronger economic growth and higher inflation later in the year.
• Emerging markets delivered mixed performance amid rising U.S. yields and continued global recovery optimism.
• Commodity prices strengthened further due to improving global demand expectations.

Asia (ex. Japan)

Asian markets outside Japan advanced during January as strong Chinese economic data and continued global demand for technology products supported investor sentiment. Chinese exports and manufacturing activity remained particularly strong despite periodic localised coronavirus restrictions.

Taiwan and South Korea continued outperforming due to exceptional semiconductor demand, while broader regional markets benefited from improving trade conditions and expectations for continued global recovery throughout 2021.

Europe

European equities delivered positive returns during January as investors focused on vaccine rollouts and expectations for stronger economic activity later in the year. Cyclical sectors such as industrials and financials benefited from reopening optimism.

However, renewed lockdowns and slower-than-expected vaccine distribution across several countries limited gains, while the European Central Bank maintained highly accommodative monetary support.

United States

U.S. equities reached further record highs during January as investors anticipated additional fiscal stimulus under the new Biden administration and continued Federal Reserve support.

Technology and growth sectors remained key market drivers, though rising Treasury yields late in the month began supporting cyclical sectors tied to economic reopening and infrastructure spending expectations.

United Kingdom

UK equities advanced during January as vaccine rollout progress in the United Kingdom improved investor confidence regarding economic reopening prospects.

Despite continued lockdown measures and economic disruption, markets responded positively to expectations that widespread vaccinations would allow a faster recovery compared with several other European economies.

Japan

Japanese equities performed strongly during January as improving global trade conditions and robust Asian demand supported exporters and manufacturing sectors.

The Bank of Japan maintained accommodative monetary policies while investors remained optimistic regarding global recovery prospects and vaccine-driven reopening trends.

Emerging Markets

Emerging markets delivered mixed performance during January as rising U.S. Treasury yields created some pressure on capital flows despite improving global growth expectations.

Asian emerging markets remained relatively strong due to export momentum and technology demand, while some commodity-exporting economies benefited from higher energy and metals prices.

Commodities

Commodity prices strengthened during January as investors anticipated stronger global demand and economic recovery during 2021. Oil prices advanced steadily due to improving mobility expectations and continued OPEC supply discipline.

Industrial metals remained highly supported by infrastructure spending expectations and strong Chinese demand, while gold prices weakened modestly as rising bond yields reduced safe-haven demand.